Correlation Between GM and Brookfield Property

Can any of the company-specific risk be diversified away by investing in both GM and Brookfield Property at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GM and Brookfield Property into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between General Motors and Brookfield Property Partners, you can compare the effects of market volatilities on GM and Brookfield Property and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in GM with a short position of Brookfield Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Brookfield Property.

Diversification Opportunities for GM and Brookfield Property

0.13

Correlation Coefficient

GM  Brookfield Property

Average diversification

The 3 months correlation between GM and Brookfield is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Brookfield Property Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Property and GM is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on General Motors are associated (or correlated) with Brookfield Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Property has no effect on the direction of GM i.e., GM and Brookfield Property go up and down completely randomly.

Pair Corralation between GM and Brookfield Property

Allowing for the 90-day total investment horizon General Motors is expected to generate 1.2 times more return on investment than Brookfield Property. However, GM is 1.2 times more volatile than Brookfield Property Partners. It trades about 0.07 of its potential returns per unit of risk. Brookfield Property Partners is currently generating about 0.06 per unit of risk. If you would invest  3,938  in General Motors on October 22, 2024 and sell it today you would earn a total of  1,159  from holding General Motors or generate 29.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.56%
Values	Daily Returns

General Motors  vs.  Brookfield Property Partners

General Motors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days General Motors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, GM is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Brookfield Property

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brookfield Property Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Preferred Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with GM and Brookfield Property

The main advantage of trading using opposite GM and Brookfield Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Brookfield Property can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Brookfield Property will offset losses from the drop in Brookfield Property's long position.

The idea behind General Motors and Brookfield Property Partners pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.